Phumlani Majozi says race based policies or redistribution are not the solution to inequality in SA
I was immensely honored to participate in a conference against South Africa’s race-based laws organised by Solidarity in Pretoria this week. It really was a pleasure to be amongst the people tackling such an essential subject in a democratic South Africa.
The political parties that were represented at the conference were Action SA of Herman Mashaba, DA, ACDP, Freedom Front Plus. It was wonderful to share the conference table and speak along the likes of John Steenhuisen leader of the DA, and Pieter Groenewald leader of Freedom Front Plus, Bishop Dulton Adams of ACDP, all great South Africans who love South Africa.
In my very short speech, I made a case for a private sector-driven economy, argued that race-based policies stunt and will stunt South Africa’s economy.
After the conference, I had three media interviews, in which I passionately spoke in favor of transformation. South Africa needs the transformation of the economy. However, we should strive for what I call “transformation of creation”, not “transformation of redistribution”. My comments were aired on eNCA.
We must create more businesses and invest in human capital. This approach to transformation would lay stronger foundations for a productive economy that reduces and suppresses unemployment and poverty.
Our policy makers ought to understand that the creation of wealth creates job opportunities and increased tax revenues, the taxes that can be used by the government to finance economic development.
Inequality and poverty in South Africa
It is well-known fact that South Africa has very high levels of inequality. South Africa’s inequality must not be a racial issue at this point, because there are already staggering levels of inequality within the black people themselves. An honest discussion on South Africa’s inequality must not omit this reality.
Every race is affected by poverty. That black people have relatively higher rates of poverty does not refute that reality. Again, here, an honest conversation or dialogue must incorporate this fact.
Race-based policies or redistribution is not the solution and stunts the productivity of South Africa’s already weak economy that the IMF projects will grow by a dismal 0.1% this year. The South African Reserve Bank (SARB) projects 0.3%.
It is not rocket-science to determine what the sources of inequality and poverty are in South Africa.
The disparities in levels of education, skills, knowledge and experience in various sectors of the economy, as well as differences in the rates of family breakdown, produces wealth inequality amongst South Africans.
Broken families are more prevalent amongst black people, in contrast to other racial groups. Broken families have a huge negative impact on socio economic development. If you want to understand in detail the impact of broken on economic development, study the works of the American Enterprise Institute (AEI) and Brookings Institution. Locally, you can check the work of Fazel E. Freeks, a professor at North-West University.
So, what must the government do?
The answer to this question is very simple. The government's role must be to create conditions that empower the poor with robustly competitive skills development and education. It must be education and skills development that are in demand in the market. Because if it’s just education, whose skills are not in high demand in the market, little progress will be achieved still.
We also need to rethink the labour market, in the sense that we must develop a habit of seeing ourselves as employers. We must strengthen our entrepreneurship education across the whole country. The government, along with the private sector should fund more small-to-medium enterprises that are worth investing in.
The problems of illegal immigration must also be addressed as that contributes to high levels of unemployment rates and inequality. However, it must be done in a constructive, strategic manner. On this front the government has failed us. We cannot afford porous borders.
The energy problems continue to kill businesses and contribute to unemployment. We can't expect to reduce poverty and inequality with energy problems of this magnitude.
Popular economist Iraj Abedian was on eNCA two weeks ago, and correctly pointed out that government's bad policy has been instrumental in the decline of the ZAR currency and the weakening of the economy. It was a good assessment by Iraj. All the dire macro conditions are largely domestic and man-made in South Africa.
A strong economy with skilled people and more businesses being created will help reduce South Africa’s poverty and inequality. It is not race-based policies that will uplift South Africa’s poor, it’s commitment to building a stronger growing economy.
If I were President of South Africa, I would turn the whole country into a Special Economic Zone. What stops us from doing that other than political interests and dogmas?
Solidarity should be commended for its brave fight against the counterproductive race-based policies that harm the country.
I signed the resolution against race-based policies at the conference with pride. We have been scammed by the political elite who keep making flawed arguments that the South African economy is controlled by white people, which cannot be proven. Even Africa Check has concluded that such has not been proven.
All the institutions that control the country's economy are in the hands of black people, from the South African Reserve Bank (SARB) to the Treasury, to the Competition Commission. That the economy is controlled by white people is propaganda.
South Africa is a beautiful country with huge potential politicians. It’s being mismanaged by incompetent politicians, who took the state-owned institutions that worked better in 1994 and destroyed them. Organisations like Solidarity should be supported in their fight for a better South Africa.
Phumlani M. Majozi is a senior fellow at African Liberty. His website is phumlanimajozi.com. Follow him on Twitter: @PhumlaniMMajozi.